Important Changes to Reverse Mortgages (HECMs)

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Services for Real Estate Pros with ReadySetLoan Condo Team LLC
https://activerain.com/droplet/4g2S

Important Changes to Reverse Mortgages (HECMs)

mortgagee letter 2014-07Yesterday, FHA released amendments to the Home Equity Conversion Mortgage program via Mortgagee Letter 2014-07.  FHA will be holding a conference call regarding the changes on May 1, 2014.  The details of the call are located below.

The primary purpose of this amendment is to clarify the requirements of the due and payable status when there is a Non-Borrowing Spouse following the death of the last mortgagor.

A Non-Borrowing Spouse is allowed in the HECM guidelines but the Spouse must be disclosed at origination of the loan.  Following the death of the last mortgagor, the due and payable terms are deferred so long as the Spouse meets the criteria for deferment.  The terms of the loan, however, are not assumable and any disbursements made to the Borrower(s) will cease upon the death of the last mortgagor.

To qualify for the deferment, the Spouse must:

·        Have been the spouse at the signing/closing of the loan and remained the spouse during the life of the loan to date;

·        Have been properly disclosed as a Non-Borrowing Spouse in the loan documents; and

·        Have occupied and continue to occupy as a Principle Residence the property securing the HECM.

In addition, the Non-Borrowing Spouse must satisfy and continue to satisfy the following:

·        Within 90 days of the death of the last mortgagor, the Spouse must establish a legal right to remain in the property;

·        All obligations contained in the HECM loan documents continue to be satisfied; and

·        Ensure that the HECM does not become due and payable for any other reason.

It also specifies that so long as the Non-Borrowing Spouse meets these requirements, the lender may not call the loan due and payable.

The conference call regarding this topic will be:

Date: May 1, 2014

Time: 3-4pm EST

Number: 800-707-9573

Access Code: 325170

You can submit questions to be addressed during the call by emailing them to FHASFCall@hud.gov before April 29, 2014. 

Posted by

The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.

 

ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.

 

Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.

 


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

eric.boucher@readysetloan.com
ready set loan condo team

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Ritu Desai 04/27/2014 10:30 PM
Topic:
Mortgage / Finance
Groups:
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The Lounge at Active Rain
The FHA Mortgage Group
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Tags:
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hecm changes
mortgagee letter 201407

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Ambassador
2,718,928
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

This is important.  As prices increase, more home owners will be seeking relief through this instrument.  I may be wrong but the regs for this loan appear to be tighter and tighter.

Apr 27, 2014 06:06 AM #5
Rainmaker
331,454
HomeSalesForce.com Team Powered by eXp Realty
eXp Realty - Canton, GA
Canton, Alpharetta, Roswell, Woodstock, Atlanta

Whenever the government announces something on the weekend it's usually not a good thing. I don't know much about these reverse mortgages and don't understand why someone would want to use one. SO, I too need to stucy up on this topic.

Apr 27, 2014 06:42 AM #6
Rainer
307,836
Raymond Denton
Academy Mortgage Corporation - Irvine, CA
Simple Man

>>Actually Eric, there are other sources for reverse mortgages

There's only one alternative source, Bill, the GenPlus program from Generation Mortgage.  It's good for values up to $6,000,000.00, whereas FHA has a $625,500.00 cap.

In most instances, the FHA-insured program sponsored by HUD works best.

Apr 27, 2014 07:57 AM #7
Rainmaker
142,230
Diana White-Pettis
Bennett Realty Solutions - Upper Marlboro, MD
GRI, CDPE, CNE, WHC Upper Marlboro Homes for Sale

Thanks for the information.  I have limited knowledge about reverse mortgages, but I know many people who are using the product.  So, I would definitely like to become more knowledgeable about the HECM changes going into effect on May lst. 

Apr 27, 2014 12:32 PM #8
Rainmaker
1,317,075
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

You will have to bring us up to date after the call.  I was just wondering what this means

"the Spouse must establish a legal right to remain in the property"

Apr 27, 2014 12:55 PM #9
Rainmaker
2,254,255
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

The changes are likely to have significant benefit for some reverse mortgage homeowners.  

Apr 27, 2014 01:18 PM #10
Rainmaker
2,628,495
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

 I'm a few years away from my dream home, when it does happen all this information strikingly pertinent then

Apr 27, 2014 03:21 PM #11
Rainmaker
350,240
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Lenn, the administrator at HUD in charge of condo project approvals has also been tasked with revamping the HECM product.  She has been bogged down with condos that HECMs have taken a back seat but that should change shortly.

Jean and John, there are many reasons for the use of this product.

Thank you for the information, Raymond.  I don't write these loans and have learned enough about HECMs to speak intelligently to condo associations.

Diana - I would recommend reading up on purchase reverse mortgages.  They can be an important tool for seniors who wish to purchase a home but won't gain enough proceeds from the sale of their current one to do so.

Hi Joan - I won't get into all of the legalese (because I don't know it well enough) but I can give you a scenario: the Spouse isn't on title.  When the mortgagor passes, title may transfer to the non-titled spouse or it may take effort to accomplish this.  If title transfers to an estate, the Spouse would have to execute some form of legal document (lease or a transfer of title) to remain in the property.  The spouse can't just be allowed to stay there.

Myrl, I would think that this would benefit non-borrowing spouses greatly.

Laura - judging from your profile picture, you are far too young for a reverse mortgage at this stage of your life

Apr 27, 2014 08:08 PM #12
Rainmaker
2,161,922
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Eric. Well deserved feature, as this post is very informative. Anyone one that does reverse mortgages should be reading your post.

Make it a great week!

Apr 27, 2014 09:10 PM #13
Rainmaker
2,584,424
Nina Hollander
Coldwell Banker Residential Brokerage | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

These sound like logical changes that will provide positive benefits for this poorly undestood financing method.

Apr 27, 2014 09:34 PM #14
Rainmaker
350,240
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Thank you very much, Joe.

Nina - these are positive changes to the program and should aid in estate planning for married couples.

Apr 27, 2014 10:23 PM #15
Rainmaker
1,338,677
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Eric, this is important information for anyone who wishes to do a reverse mortgage.

Apr 27, 2014 10:47 PM #16
Rainmaker
1,883,481
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Excellent information. Thank you for posting.

Apr 28, 2014 12:10 AM #17
Rainer
139,574
Brad Lauritzen
Contempo Lending, Inc. - Hemet, CA

Thank you Joe...this hadn't come across my desk yet but will be sending to my senior clientel. 

Apr 28, 2014 12:57 AM #18
Rainmaker
437,819
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

Thanks, Eric. I need to learn a lot more about these mortgages. Thanks for the inspiration.
Bruce

 

Apr 28, 2014 03:34 AM #19
Rainmaker
3,240,064
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Eric

Thanks for sharing the updates for Reverse Mortgages.

Good luck and success.

Lou Ludwig

Apr 28, 2014 08:04 AM #20
Rainmaker
350,240
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Michael - it is a great program for the right borrowers.

You're welcome, Andrew

Brad - I try to maintain a working knowledge of the program even though I no longer write loans.

Bruce - if I were you, I would read about purchase HECMs.  That knowledge would come in handy when talking with seniors.

Thank you, Lou

Apr 28, 2014 11:26 PM #21
Anonymous
Bob Reisen
Thanks for your informative article. Younger spouses who do not qualify as a borrower at the time of application have been a problem since HUD expanded the NBS requirements. It was also a deterrent for borrowers who are concerned with the welfare of their NBS in the event of their death. The new ML offers a significant improvement and will be appealing to a lot of prospective borrowers.
Apr 29, 2014 02:15 AM #22
Rainer
132,818
Roseanne Campagna
John L. Scott RE Maple Valley, WA - Maple Valley, WA
Kent/DesMoines/Blk Diamond/Renton/Maple Valley, WA

This is useful information that will be a point of discussion in the near future. I'll be looking into the purchase of an HECM also. Thanks!

Apr 29, 2014 08:34 AM #23
Rainmaker
2,215,722
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Thanks for sharing such helpful information as I did not know the changes that were made

Jun 08, 2014 12:24 PM #24
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